Investors talk in front of a board displaying share prices at a security firm in Shanghai on July 1, 2015. Shanghai shares closed down more than five percent on July 1, resuming their downward trajectory a day after recording their biggest gains in more than six years. Photo: AFP/Getty Images

BEIJING (Reuters) - China's top securities brokerages said on Saturday that they would collectively buy at least 120 billion yuan ($19.3 billion of shares in a bid to stabilize the country's stock markets after a slump of nearly 30 percent since mid-June.

The pledge follows near-daily official policy moves over the past week, including an interest rate cut and a relaxation of margin lending rules, that have so far failed to arrest the sell-off, which some market watchers fear could turn into a full-blown crash.

The rout in China's highly leveraged stock market has become a major worry for international investors, who fear a meltdown could further destabilize the global economy even as Greece risks crashing out of the European common currency.

China stocks had more than doubled over the past year, fueled in large part by investors using borrowed money to speculate on further gains.

The brokerages met on Saturday in Beijing to discuss the market situation and expressed "full confidence" in the development of China's capital markets, a statement on the website of the Securities Association of China said.

"Twenty-one securities brokerages will jointly invest 15 percent of net assets as of the end of June, or no less than 120 billion yuan, in blue chip exchange traded funds," it said.

The brokerages will not sell off holdings as long as the Shanghai Composite Index is below 4,500 points, the statement said.

That could leave them saddled with heavy losses on paper from the start. The SSEC index fell 5.8 percent on Friday to end at 3,684 points.

Listed securities companies among the 21 brokerages, along with their major shareholders, also would buy back shares.

Hong Hao, a chief strategist at BOCOM International, said he was confused by the slew of measures announced recently.

Hao doubted the latest plan would be enough to arrest the price slide，and said it could sow the seeds of fresh problems in the future by further distorting the market.

"Around 120 billion yuan is not enough，but if leverage (more borrowing) is used，it could expand to over 500 billion yuan and that may have some effect," he said.

Moreover, while brokerages were likely to focus on stronger, blue-chip companies, Hao said there would be little interest in saving small and wildly overvalued "growth" firms. Such companies are favored by ordinary investors from cashiers to taxi drivers, but have suffered some of the most savage declines in recent weeks.

POLICY CONFUSION?

Just a few months ago, state media had been exhorting the market's rise, saying China's bull market had just begun and denying that it was in a bubble. Investors big and small took that as a government signal to buy.

Now, Beijing is struggling to find a policy formula to restore confidence in the market before too much damage is done to the world's second-largest economy.

Weighed down by a property downturn, factory overcapacity and high levels of local government debt, China's economic growth had already been expected to slow to around 7 percent in 2015, robust by global standards but its weakest annual expansion in a quarter of a century.

After the market close on Friday, the China Securities Regulatory Commission (CSRC) said China would cut initial public offerings and capital raisings and support long-term investors entering the market to help stabilize prices.

The People's Bank of China (PBOC) also rolled over 250 billion yuan of medium-term loans to banks late on Friday to ensure adequate liquidity in the system.

Investors say constant tinkering with monetary policy and regulations to try to temper the stock market slide raises wider questions about whether China is ready to open up its capital markets and have more influence in the international financial system.